House Financial Services Committee Chairman Barney Frank (D-Massachusetts) and Rep. Gary Miller (R-California) urged the U.S. Senate August 17 to raise the conforming loan limit beyond the House passed reform bill for the Government Sponsored Enterprises (GSE) of Fannie Mae and Freddie Mac.

Right now, Fannie and Freddie can only buy a mortgage up to $417,000, explains Steve Adamske, a spokesperson for the House Financial Services Committee. The House wants the Senate to increase that amount. But the House bill, the Federal Housing Finance Reform Act of 2007 (H.R. 1427), which passed in May, includes a “carve out for major metropolitan areas (high cost areas) where the median home price exceeds the current limit,” Adamske adds. “In these high cost areas, the limit would be set at the median home price up to a ceiling of 150% of the current limit.”

Rep. Frank said in a prepared statement that “It now is clear we underestimated in the House bill how far we should raise the conforming loan limit, and the current crises in the mortgage market demonstrate we should raise it to a higher level.” He added: “I urge the Senate to make this a priority as part of GSE reform, because we now have the opportunity to help homeowners get access to needed credit by allowing Fannie Mae and Freddie Mac to play a larger role.”

According to a House release, H.R. 1427 will overhaul the regulatory oversight of the government sponsored enterprises (GSE) of Fannie Mae, Freddie Mac and the Federal Home Loan Banks, and create a new, independent regulator with broad powers analogous to current banking regulators. The regulator’s primary responsibility will be to ensure the safety and soundness of the institutions. In addition, the bill creates an off-budget and non-taxpayer financed affordable housing fund, which will dedicate hundreds of millions of dollars for the construction, maintenance, and preservation of affordable housing with the first year of the fund to be dedicated to the hurricane stricken areas of the Gulf Coast, and billions of dollars over the next five years for affordable housing nationwide. The bipartisan bill was originally introduced by Chairman Frank, along with Reps. Richard Baker (R-Louisiana), Mel Watt (D-North Carolina), and Gary Miller (R-California).